For-Profit Search Platforms
We consider optimal pricing by a profit-maximizing platform running a dynamic search and matching market. Buyers and sellers enter in cohorts over time, meet and bargain under private information. The optimal centralized mechanism, which involves posting a bid-ask spread, can be decentralized through participation fees charged by the intermediary to both sides. The sum of buyersâ€™ and sellersâ€™ fees equals the sum of inverse hazard rates of the marginal types and their ratio equals the ratio of buyersâ€™ and sellersâ€™ bargaining weights. We also show that a monopolistic intermediary in a search market may be welfare enhancing.
|Date of creation:||16 Jul 2013|
|Date of revision:|
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